Fitell Corporation Announces Closing of Registered Direct Offering for up to $10.0 Million

Rhea-AI Summary

Fitell (Nasdaq: FTEL), an Australian online retailer of gym and fitness equipment, has closed its previously announced registered direct offering. The offering includes 796,813 ordinary shares and warrants to purchase up to 1,195,220 additional ordinary shares at $5.02 per share.

The company raised $4.0 million in gross proceeds initially, with potential additional proceeds of $6.0 million if all warrants are exercised. The warrants are immediately exercisable and expire in three years. Rodman & Renshaw served as the exclusive placement agent.

Fitell plans to use the net proceeds for developing and launching smart fitness equipment, general corporate purposes, working capital, and potentially acquiring complementary businesses or technologies, though no specific commitments exist currently.

Positive

• Secured immediate funding of $4.0 million through share offering
• Potential for additional $6.0 million through warrant exercises
• Strategic focus on smart fitness equipment development

Negative

• Share dilution from issuance of 796,813 new ordinary shares
• Further potential dilution if warrants for 1,195,220 shares are exercised
• No guarantee that warrants will be exercised for additional funding

Insights

Financial Analyst

The $4.0 million registered direct offering by Fitell represents a significant capital injection for a company with a market cap of approximately $52.3 million. The deal structure is particularly noteworthy, featuring 796,813 ordinary shares plus warrants for an additional 1,195,220 shares, all priced at $5.02 per share - a substantial 86.6% premium to the current market price.

The premium pricing is a strong positive signal, suggesting institutional confidence in Fitell's long-term value proposition. However, the warrant component introduces potential future dilution of approximately 10.2% if fully exercised, based on the current shares outstanding. The three-year warrant exercise window provides a balanced approach to capital raising, offering flexibility while maintaining shareholder value.

The strategic focus on smart fitness equipment development signals a pivotal shift from traditional retail to higher-margin, technology-enabled products. This transition could substantially improve the company's competitive position in the Australian fitness market, where connected fitness solutions are gaining traction. The inclusion of potential M&A in the use of proceeds suggests an opportunistic approach to market consolidation.

The shelf registration and involvement of Rodman & Renshaw adds credibility to the offering, though investors should note that warrant exercise remains uncertain. The capital structure, post-offering, provides adequate runway for product development while maintaining flexibility for strategic initiatives.

$4.0 million upfront with up to an additional $6.0 million of gross proceeds upon the exercise in full for cash of warrants

TAREN POINT, Australia, Feb. 10, 2025 (GLOBE NEWSWIRE) -- Fitell Corporation (Nasdaq: FTEL) (“Fitell” or the “Company”), an online retailer of gym and fitness equipment in Australia, today announced the closing of its previously announced registered direct offering of 796,813 ordinary shares and an additional investment right to purchase up to 1,195,220 ordinary shares in the form of warrants, at a purchase price of $5.02 per ordinary share and associated warrant. The warrants have an exercise price of $5.02 per share, are exercisable immediately upon issuance and expire three years following the issuance date.

Rodman & Renshaw LLC acted as the exclusive placement agent for the offering.

The gross proceeds to the Company from the offering were approximately $4.0 million, before deducting the placement agent’s fees and other offering expenses payable by the Company. The potential gross proceeds from the warrants, if fully exercised on a cash basis, will be approximately $6.0 million. No assurance can be given that any of the warrants will be exercised. The Company intends to use the net proceeds for the development and commercial launch of smart fitness equipment and for general corporate purposes and working capital. The Company may also use a portion of the net proceeds from this offering to acquire or invest in complementary businesses, technologies, or other intellectual property, although the Company has no present commitments or agreements to do so.

The securities described above were offered and sold by the Company in a registered direct offering pursuant to a “shelf” registration statement on Form F-3 (File No. 333-284232), including a base prospectus, that was originally filed with the Securities and Exchange Commission (the “SEC”) on January 10, 2025, and declared effective by the SEC on February 5, 2025. The offering of such securities in the registered direct offering was made only by means of a prospectus supplement that forms a part of such effective registration statement. The prospectus supplement and the accompanying base prospectus relating to the registered direct offering were filed with the SEC and are available on the SEC’s website located at www.sec.gov. Electronic copies of the final prospectus supplement and the accompanying base prospectus may also be obtained from Rodman & Renshaw LLC at 600 Lexington Avenue, 32nd Floor, New York, NY 10022, by telephone at (212) 540-4414, or by email at info@rodm.com.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein or any other securities, nor shall there be any sale of the securities described herein or any other securities in any state or other jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About Fitell Corporation

Fitell Corporation, through GD Wellness Pty Ltd (“GD”), its wholly owned subsidiary, is an online retailer of gym and fitness equipment both under its proprietary brands and other brand names in Australia. The company’s mission is to build an ecosystem with a whole fitness and wellness experience powered by technology to our customers. GD has served over 100,000 customers with large portions of sales from repeat customers over the years. The Company’s brand portfolio can be categorized into three proprietary brands under its Gym Direct brand: Muscle Motion, Rapid Motion, and FleetX, in over 2,000 stock-keeping units (SKUs). For additional information, please visit the Company’s website at www.fitellcorp.com.

Forward-Looking Statements

This press release contains “forward-looking statements”. Forward-looking statements reflect our current view about future events and include, but are not limited to, statements regarding the exercise of the warrants prior to their expiration and the intended use of proceeds from the offering. These forward-looking statements involve known and unknown risks and uncertainties, including market and other conditions, and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can identify these forward-looking statements by words or phrases such as “may,” “will,” “could,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “propose,” “potential,” “continue” or similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the SEC.

For more information, please contact:

Chief Financial Officer
Jamarson Kong
jamarson@gymdirect.com.au

Investor Relations
ir@fitellcorp.com

FAQ

How much did Fitell (FTEL) raise in its February 2025 registered direct offering?

Fitell raised $4.0 million in initial gross proceeds, with potential additional proceeds of $6.0 million if all warrants are exercised.

What is the exercise price and duration of FTEL's February 2025 warrants?

The warrants have an exercise price of $5.02 per share and expire three years from their issuance date.

How many shares were issued in FTEL's February 2025 offering?

The offering included 796,813 ordinary shares and warrants to purchase up to 1,195,220 additional ordinary shares.

What will FTEL use the proceeds from the February 2025 offering for?

The proceeds will be used for developing and launching smart fitness equipment, general corporate purposes, working capital, and potentially acquiring complementary businesses or technologies.

Who was the placement agent for FTEL's February 2025 offering?

Rodman & Renshaw acted as the exclusive placement agent for the offering.